Understanding 5 Types of Car Loans

There are a variety of car loans available that offer different options for buyers. Choosing the right financing product can be intimidating if you don’t know what is available. A good way to start is to learn the basics so you have an idea of what type will work best in your situation.

car loans

Buying with Personal Loans

Personal loans are relatively common. They can be used for a number of purchases, including holidays, home improvements, and medical expenses. Some people may consider using this as a way to finance a car. While it can work, it is not generally recommended because you will end up paying more in the long run. Take a close look at interest rates before agreeing to a personal loan.

Buying with Car Loans

Car loans are also very common and usually make more sense when buying a vehicle.  This type of lending product has a lot in common with personal loans. It can be much cheaper to buy this way. Car loans generally come with lower interest rates because the vehicle is used as security towards your loan.

Buying with a Chattel Mortgage

You may be eligible to get a car loan through a Chattel mortgage. This type is only available for vehicles that are purchased for business use. The company will own the vehicle while the financier uses it as security towards their loan. This approach will get you the lowest interest rates, and it is tax deductible.

Buying with Commercial Hire Purchase

Commercial hire purchase presents another alternative to traditional car loans. This method involves the financier buying the vehicle on your behalf. They will hire it back to you over a period of time. You get full use of the car, but you are not the owner until the final payment is made.

Buying with a Novated Lease

A novated lease involves an employee, their employer, and the leasing company. In this situation, the employee leases the vehicle while their employer agrees to take on their obligations. Lease payments are made by the employer on behalf of the employee who is buying the car. This is done through deductions taken from pre-tax income. There are three types you can use including a novated finance lease, a fully maintained novated lease, and a fully maintained novated operation lease.

If you have questions about car loans and your eligibility, contact Blink Finance. We are available to provide answers and help you make decisions that will save money. Visit our website to complete an online assessment or call 1300 827 848 to talk to our experts.